Commr. of C. Ex. Vs. Chakolas Spinning and Weaving - Court Judgment

Excerpt:
1. these appeals are filed by the revenue against the order of the commissioner (appeals). the issue involved is whether, while computing the value of captively consumed yarn, cost of cone winding and notional profit should be added or not.3. the departmental representative admits that the charges incurred toward cone winding is after the duty has been paid on the yarn at the spindle stage. we observe that such charges which have been incurred after duty has been paid are rightly considered as post-manufacturing expenses and, therefore, cannot be added into the cost of yarn. the second issue is about adding of 10% notional profit. under rule 6(b)(ii) of the valuation rules, profit, if any, can be added while computing the cost of production of goods captively consumed. in the case of union carbide india ltd. v. cce, calcutta [2003 (158) e.l.t. 15 (s.c)l, the apex court holds that notional profit can be added while computing the value of captively consumed goods, under rule 6(b)(ii) of the valuation rules.4. in view of our above discussions, we hold that the department's contention that cone winding charges have to be added to the cost of production of yarn is not tenable and, therefore, rejected. in regard to notional profit, we hold that such profit is an admissible addition in view of the apex court's decision cited supra. rule 6(b)(ii) of the valuation rules also permits such addition.

Judgment:
1. These appeals are filed by the Revenue against the Order of the Commissioner (Appeals). The issue involved is whether, while computing the value of captively consumed yarn, cost of cone winding and notional profit should be added or not.

3. The departmental representative admits that the charges incurred toward cone winding is after the duty has been paid on the yarn at the spindle stage. We observe that such charges which have been incurred after duty has been paid are rightly considered as post-manufacturing expenses and, therefore, cannot be added into the cost of yarn. The second issue is about adding of 10% notional profit. Under Rule 6(b)(ii) of the Valuation Rules, profit, if any, can be added while computing the cost of production of goods captively consumed. In the case of Union Carbide India Ltd. v. CCE, Calcutta [2003 (158) E.L.T. 15 (S.C)l, the Apex Court holds that notional profit can be added while computing the value of captively consumed goods, under Rule 6(b)(ii) of the Valuation Rules.

4. In view of our above discussions, we hold that the department's contention that cone winding charges have to be added to the cost of production of yarn is not tenable and, therefore, rejected. In regard to notional profit, we hold that such profit is an admissible addition in view of the Apex Court's decision cited supra. Rule 6(b)(ii) of the Valuation Rules also permits such addition.